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A guide to financial discussions with your partner to plan, navigate and execute financial decisions together.
Disclaimer: The information provided is not intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. We encourage you to seek specific advice from your personal tax or legal counsel.
Personal finance requires dedication and effort. Relationships require dedication and effort. Personal finance in relationships... well, you see where we're going. A successful financial situation in a relationship does not just fall into place. You must be deliberate about it and dedicated to it.
We will help you navigate your way through discussing finances with your partner. Where to begin? It starts with making time for open conversations. (We recommend bringing snacks and a beverage too!)
Our experience
With more than 20 years witnessing hundreds and hundreds of financial conversations between spouses, we've seen it all. And no doubt, there's a trend with the "successful" situations and those that need some help. We've learned that the most productive conversations follow these guidelines:
Start with an encouraging and positive environment, in which both parties seek to further understand each other—not simply be understood by the other.
Recognize they are starting a journey, not trying to solve everything in one sitting
Take turns listening and sharing.
What we often learn in these conversations is that we each have very deep relationships with money and planning, typically stemming from our youth. Open and regular conversations with our partners sets the foundation for a healthy financial relationship where both parties are involved and privy to their complete financial situation.
Our recommendation
The basic recommendation here is simple: have the conversations early and regularly, and keep them positive.
When your conversations start to drift to "heated," as they certainly can, take a break and come back later. But, be sure to come back! Recognize that, while these conversations can be difficult, they can also be incredibly powerful—for your finances and your relationship.
If you're planning to get married, share banks accounts, and/or share bills, we recommend you begin having these conversations as early as possible. (For example, if you're getting married, have your first conversation about finances when you get engaged). From there, regularly schedule your "finance dates" for every 3-4 months, or with any life changing events like a job change or change to your family situation.
Your action plan
Follow these simple steps to kickstart your finance dates with your partner:
Set the mood. Find a common ground to start your discussions, where you have no distractions, nothing else needing your attention and a place where you both feel comfortable being open. Personally, we often have these discussions combined with a night out and a good microbrew to keep things light.
Start with high level, broad finance topics to get your feet wet, like the following:
How do you feel overall about our personal finances?
What keeps you up and worrying at night?
What financial trigger points do you have?
How often do you think about our finances?
What financial habits did you establish in your youth?
What financial habits were you raised with? What did you see your parents do around money?
Once you're both comfortable, dive into the specifics. Keep in mind these topics and questions are not meant to be addressed in one sitting; your financial plan is something you should develop and adapt over time. Specific topics to address include:
Total net worth: Are you both up to speed on where your money and assets are, how much you have, and how to access it?
Budget: Do you have a budget? Do you need a budget? (Yes, you do. It can be informal and not exact, but you need to look at it regularly).
Debt: Student, personal, mortgage. Do you have a debt payoff plan for any personal and student debt? Are you both aware how much is remaining on your mortgage, how much your payments are, and your approximate rate? Do you have refinancing on your radar?
Insurance (life and home/auto): Do you have the right amount of life insurance? Do you regularly check your home and auto insurance to make sure you have no gaps in coverage and are paying appropriate premiums? Do you need umbrella coverage?
Retirement: When do you want to retire? Are you planning for retirement? How much do you need to retire? What does retirement look like for you?
Savings & Investments: Are you investing as you should? Is your asset allocation appropriate? Do you have the proper cash reserve?
Income Tax Planning: Do you need a CPA or are you doing your own taxes? Do you have a tax preparer you trust? Are you doing tax planning during the year, evaluating potential capital losses in taxable investment accounts, looking at charitable contributions, evaluating tax deductible retirement savings?
Estate Planning: Do you have an up-to-date estate plan (wills, guardianship and trusts)? Do you need a formal estate plan? Do you need to talk to your parents about their estate plans and the impact that may have on your situation?
College Savings: Do you have college savings plans for your children? Are you regularly making contributions? Are you using the right savings plans based on your state of residence, the performance and tax impact of using your own state's plan? Are grandparents asking to contribute to education?